International Travel House Ltd

Focused on business class

India’s economic recovery and attraction as investment destination willboost corporate travel

International Travel House (ITHL), a constituent of the ITC group (61.7% stake), is oneof India’s leading travel management companies servicing the travel needs of Indianand multinational business houses with implants in 160 companies. Since commencingoperations in 1981, ITHL offers a full bouquet of travel services and has grown to be oneof the largest complete travel management companies in India, with each of its productsand services bearing the distinct ISO 9001 quality benchmarking. Clients include NDTV,Infosys, HCL, Siemens, Citibank, ABN, Samsung, Max Hospitals, FICCI, Essel group and 3M,apart from the ITC group. It owns a transport fleet of 900 cars and has over 700 trainedtravel professionals.Recognised and approved as a travel agent and tour operator by the Air TransportAssociation. ITHL is affiliated with the World Tourism Organisation, Universal Federationof Travel Agents Associations, American Society of Travel Agents, International Congresses& Conventions Associations, and the Travel Agents Association of India.

Due to severe global slowdown in 2009, most Indian and MNC companies had imposed travel restrictions to reduce cost. Many travels were canceled and cheaper alternatives were preferred. As the Indian economy springs back, most travel restrictions have been lifted.Business travel, thus, has got back on track.With a team of dedicated professionals, a nationwide network, and state-of-the-art technology, ITHL is well equipped to address all possible travel needs of both business-and leisure travelers. It offers a range of services including corporate travel, car rental, destination management services, world class holidays, incentive group travel,conference management and foreign exchange.
With India identified as a strong center for medical services globally, ITHL is pursuing the niche segment of medical tourism. The company is also aspiring to be a leader in the conference and exhibition segment of the business. It has been appointed as the official travel partner and professional conference organizer in India by several important international conference organizers. These linkages are expected to generate continuing business during the coming years. Though ITCH was doing the business of travel insurance for quiet some time, it has started promoting it aggressively right now. At present, the company is insuring more than 80% of its clients going abroad.
After the global turmoil, things have started looking up. Companies across various sectors have started posting healthy profit growth. Global mergers and acquisitions are happening across sectors. Meeting, incentive, conference and exhibition tourism has also picked up on demand for events and incentive tours from the booming consumer durables and auto companies. The Commonwealth Games in October 2010 also offer opportunities,particularly for the car rental business. Apart from inbound traffic, outbound traffic is looking up as the Indian economy gathers steam, reducing the cost of foreign travel and stay and increasing the disposable income and confidence of Indian tourists.

ITHL was enjoying an operating profit margin (OPM) in the range of 30% till the fiscal year ended March 2008 (FY 2008). Due to severe squeeze in business, OPM compressed to21.2% in FY 2009 and slightly recovered to 23.1% in FY 2010. With demand reviving and due to various cost control measures undertaken by the company, OPM can return to near 30%level in years to come. Income from operations registered a robust growth of 51% to Rs32.98 crore in the quarter ended June 2010. OPM expanded a whopping 490 bps to 26.4%,boosting operating profit 86% to Rs 8.72 crore. Net profit increased 156% to Rs 4.27crore.

We expect ITHL to register sales and net profit of Rs 140.87 crore and Rs 18.29 crore,respectively, in FY 2011. On equity of Rs 7.99 crore and face value of Rs 10 per share,EPS works out to 22.9. The share price trades at Rs 252. P/E works out to just 11.Expected EPS for FY 2012, is around Rs 29 and P/E to 8.7. This is low for an ITC group company in a healthy growth mode.

Source: Capitaline Databases